Truxton Corporation Reports Third Quarter 2023 Results

October 19, 2023

NASHVILLE, Tenn., Oct. 19, 2023 (GLOBE NEWSWIRE) -- Truxton Corporation, the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter ended September 30, 2023. Third quarter net income attributable to common shareholders was $4.6 million or $1.57 per diluted share compared to $4.3 million or $1.49 per diluted share for the same quarter in 2022. Net income and fully diluted earnings per share for the quarter both rose by 5% compared to the third quarter of 2022.

“Truxton’s earnings reached a new quarterly high in the third quarter despite the challenging environment,” said Chairman and CEO Tom Stumb. “While we did benefit from several non-recurring revenue events in the third quarter, our core businesses of banking and wealth management continue to perform well, driven by the value we provide to our clients.”

Key Highlights

Non-interest income grew to $4.9 million in the third quarter, an increase of 3% from the second quarter of 2023 and 16% higher in comparison to the third quarter of 2022. Wealth management services constituted 93% of non-interest income in the third quarter of 2023 compared to 93% in the second quarter of 2023 and 94% in the third quarter of 2022. WMS revenue for the third quarter included one-time fees totaling more than $150 thousand.
Gross loans rose by 2% to $642 million at quarter end compared to $628 million on June 30, 2023 and were up 5% compared to $612 million on September 30, 2022.
Total deposits increased by 0.2% from $779 million at June 30, 2023, to $781 million at September 30, 2023, and were 1% lower in comparison to $790 million at September 30, 2022. Truxton continues to principally fund its growth from a single banking location led by its commitment to provide what it believes is superior deposit operations service and technology. As a result, occupancy expenditures and fixed asset investments remain a fraction of typical peers.
Net interest margin for the third quarter of 2023 was 2.61%, an increase of 7 basis points from the 2.54% experienced in the quarter ended June 30, 2023, and 34 basis points lower than 2.95% in the quarter ended September 30, 2022. Cost of funds was 3.05% in the third quarter of 2023, up from 2.80% for the quarter ended June 30, 2023, and up from 1.02% for the quarter ended September 30, 2022.
Asset quality remains sound at Truxton. Truxton had no non-performing assets on September 30, 2023. Truxton had $1 thousand of recoveries in the third quarter of 2023 compared to no net charge-offs in the trailing quarter or in the third quarter of 2022.
Truxton adopted the mandated Current Expected Credit Loss accounting methodology for calculating its allowance for credit losses effective January 1, 2023. The Allowance for Credit Losses was $6.0 million at quarter end September 30, 2023, and at quarter end June 30, 2023, each excluding $0.5 million in allowance for unfunded commitments, compared to Allowance for Loan and Lease Losses of $5.8 million at September 30, 2022. For the same three periods, the Bank’s allowance was 0.94%, 0.95%, and 0.94%, respectively, of gross loans outstanding at period end.
Truxton Risk Management, Inc., Truxton Corporation’s captive insurance company, ceased further operations in the second quarter of 2023 and was substantively, although not completely, dissolved in the third quarter of 2023, which allowed a one-time reserve release of $168 thousand.
The Bank’s capital position remains strong. Its Tier 1 leverage ratio was 10.36% at September 30, 2023, compared to 10.39% at June 30, 2023, and 9.78% at September 30, 2022. Book value per common share was $27.43, $27.01, and $23.84 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively.
During the third quarter of 2023, Truxton Corporation repurchased 12,986 shares of its common stock for $774 thousand, an average price of $59.59 per share. During the nine months ended September 30, 2023, Truxton Corporation paid dividends of $2.14 per common share, inclusive of a $1.00 special cash dividend.

About Truxton
Truxton Trust Company is a provider of wealth, banking, and family office services for wealthy individuals, their families and their business interests. Serving clients across the world, Truxton’s vastly experienced team of professionals provides customized solutions to its clients’ complex financial needs. Founded in 2004 in Nashville, Tennessee, Truxton Trust upholds its original guiding principle: do the right thing. Truxton Trust Company is a subsidiary of financial holding company, Truxton Corporation (OTCPK: TRUX). For more information, visit truxtontrust.com.

Investor Relations	Media Relations
Austin Branstetter	Swan Burrus
615-250-0783	615-250-0773
austin.branstetter@truxtontrust.com	swan.burrus@truxtontrust.com

Truxton Corporation
Consolidated Balance Sheets
(000's)
(Unaudited)

	September 30, 2023*			June 30, 2023*			September 30, 2022*
ASSETS
Cash and due from financial institutions	$	5,040		$	7,060		$	5,101
Interest bearing deposits in other financial institutions		7,589			15,287			3,906
Federal funds sold		956			1,705			-
Cash and cash equivalents		13,585			24,052			9,007

Time deposits in other financial institutions		740			1,140			1,830
Securities available for sale		259,543			272,474			263,149

Gross loans, excluding Paycheck Protection Program		641,697			627,567			611,946
Allowance for credit losses**		(6,031	)		(5,973	)		(5,750	)
Paycheck Protection Program Loans		69			80			111
Net loans		635,735			621,674			606,307

Bank owned life insurance		10,751			10,698			10,541
Restricted equity securities		1,940			2,538			2,688
Premises and equipment, net		129			143			241
Accrued interest receivable		4,310			3,945			3,207
Deferred tax asset, net		7,910			6,793			7,371
Other assets		13,922			12,414			12,417

Total assets	$	948,566		$	955,870		$	916,758


LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	116,918		$	141,503		$	154,049
Interest bearing	$	663,950			637,595			635,503
Total deposits		780,868			779,098			789,552

Federal funds purchased		-			-			6,517
Swap counterparty cash collateral		4,820			3,780			4,000
Federal Home Loan Bank advances		4,500			16,500			25,500
Federal Reserve Bank Term Funding Program advances		55,000			55,000			-
Subordinated debt		14,291			14,946			14,703
Other liabilities		9,544			7,870			7,619
Total liabilities		869,023			877,193			847,891

SHAREHOLDERS' EQUITY
Common stock, $0.10 par value	$	288		$	289		$	284
Additional paid-in capital		31,335			31,743			30,672
Retained earnings		52,780			53,883			43,748
Accumulated other comprehensive income (loss)		(18,167	)		(15,989	)		(18,510	)
Net Income	$	13,307		$	8,743		$	12,676
Total shareholders' equity		79,543			78,669			68,870

Total liabilities and shareholders' equity	$	948,566		$	955,863		$	916,761


*The information is preliminary, unaudited and based on company data available at the time of presentation.
**2022 data shows Allowance for loan losses. Truxton adopted the Current Expected Credit Loss methodology as of January 1, 2023. The total excludes reserve for credit losses on unfunded commitments recorded in Other liabilities in 2023.

Truxton Corporation
Consolidated Statements of Net Income
(000's)
(Unaudited)

	Three Months Ended						Year To Date
	September 30, 2023*		June 30, 2023*		September 30, 2022*		September 30, 2023*		September 30, 2022*
Non-interest income
Wealth management services	$	4,608	$	4,442	$	4,014	$	13,222	$	12,251
Service charges on deposit accounts		123		139		99		398		304
Securities gains (losses), net		0		0		-		58		(47	)
Bank owned life insurance income		54		54		51		159		151
Other		146		133		103		374		190
Total non-interest income		4,931		4,769		4,267		14,212		12,849

Interest income
Loans, including fees	$	9,714	$	9,107	$	6,797	$	27,308	$	17,108
Taxable securities		2,575		2,267		1,370		6,796		3,627
Tax-exempt securities		216		217		403		666		1,195
Interest bearing deposits		69		55		87		185		165
Federal funds sold		30		18		10		59		14
Other interest income		105		134		34		300		97
Total interest income		12,709		11,798		8,701		35,316		22,206

Interest expense
Deposits		5,679		4,938		1,914		14,833		3,307
Short-term borrowings		61		52		6		167		10
Long-term borrowings		716		817		194		1,769		582
Subordinated debentures		195		194		23		583		69
Total interest expense		6,650		6,001		2,137		17,353		3,968

Net interest income		6,059		5,797		6,564		17,963		18,238

Provision for credit losses		6		15		284		81		975

Net interest income after provision for loan losses		6,053		5,782		6,280		17,882		17,263

Total revenue, net		10,984		10,550		10,547		32,094		30,112

Non interest expense
Salaries and employee benefits		3,819		3,663		3,784		11,247		10,764
Occupancy		313		314		261		913		756
Furniture and equipment		7		20		25		52		87
Data processing		470		455		367		1,352		1,086
Wealth management processing fees		178		176		163		530		487
Advertising and public relations		58		35		30		139		84
Professional services		127		54		271		297		616
FDIC insurance assessments		85		75		77		235		191
Other		256		279		228		932		682
Total non interest expense		5,314		5,070		5,206		15,698		14,753

Income before income taxes		5,670		5,481		5,341		16,396		15,359

Income tax expense		1,109		1,028		1,002		3,089		2,683

Net income	$	4,560	$	4,453	$	4,339	$	13,307	$	12,676

Earnings per share:
Basic	$1.57		$1.53		$1.50		$4.58		$4.37
Diluted	$1.57		$1.53		$1.49		$4.57		$4.35
*The information is preliminary, unaudited and based on company data available at the time of presentation. Totals may not foot due to rounding.

Truxton Corporation
Selected Quarterly Financial data
At Or For The Three Months Ended
(000's)
(Unaudited)

	September 30, 2023*	June 30, 2023*	September 30, 2022*

Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.57	$1.53	$1.50
Diluted	$1.57	$1.53	$1.49
Book value per common share	$27.43	$27.01	$23.84
Tangible book value per common share	$27.43	$27.01	$23.84
Basic weighted average common shares	2,829,139	2,830,894	2,811,768
Diluted weighted average common shares	2,836,187	2,838,321	2,825,084
Common shares outstanding at period end	2,900,171	2,912,781	2,888,567


Selected Balance Sheet Data
Tangible common equity (TCE) ratio	8.39%	8.23%	7.51%
Average Loans	$634,179	$629,899	$589,142
Average earning assets (1)	$943,585	$932,732	$898,926
Average total assets	$949,755	$939,007	$908,753
Average shareholders' equity	$80,535	$76,536	$72,918


Selected Asset Quality Measures
Nonaccrual loans	$0	$0	$0
90+ days past due still accruing	$0	$0	$0
Total nonperforming loans	$0	$0	$0
Total nonperforming assets	$0	$0	$0
Net charge offs (recoveries)	($1)	$0	$0
Nonperforming loans to assets	0.00%	0.00%	0.00%
Nonperforming assets to total assets	0.00%	0.00%	0.00%
Nonperforming assets to total loans and other real estate	0.00%	0.00%	0.00%
Allowance for credit losses to total loans**	0.94%	0.95%	0.94%
Net charge offs to average loans	-0.00%	0.00%	0.00%


Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	10.36%	10.39%	9.78%
Common equity tier 1	14.11%	14.25%	12.64%
Total risk-based capital	15.04%	15.18%	13.46%

Selected Performance Ratios
Efficiency ratio	47.87%	48.56%	45.85%
Return on average assets (ROA)	1.91%	1.89%	1.89%
Return on average shareholders' equity (ROE)	22.48%	23.33%	23.61%
Return on average tangible common equity (ROTCE)	22.48%	23.33%	23.61%
Net interest margin	2.61%	2.54%	2.95%

*The information is preliminary, unaudited and based on company data available at the time of presentation.
**2022 data shows Allowance for loan losses. Truxton adopted the Current Expected Credit Loss methodology as of January 1, 2023. 2023 ratios do not include reserve for unfunded commitments
(1) Average earning assets is the daily average of earning assets. Earning assets consists of loans, mortgage loans held for sale, federal funds sold, deposits with banks, and investment securities.

Truxton Corporation
Yield Tables
For The Periods Indicated
(000's)
(Unaudited)

The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest earning assets and interest bearing liabilities and the average interest rate for interest earning assets and interest bearing liabilities, net interest spread and net interest margin for the periods indicated below:

	Three Months Ended				Three Months Ended				Three Months Ended
	September, 30 2023*				June 30, 2023*				September 30, 2022*

	Average Balances		Rates/ Yields (%)	Interest Income/ Expense	Average Balances		Rates/ Yields (%)	Interest Income/ Expense	Average Balances		Rates/ Yields (%)	Interest Income/ Expense

Earning Assets
Loans	$634,179		6.01	$9,602	$629,899		5.72	$8,989	$589,142		4.50	$6,680
Loan fees	$0		0.07	$112	$0		0.08	$119	$0		0.08	$117
Loans with fees		634,180	6.08	$9,714	$629,899		5.80	$9,107	$589,142		4.58	$6,797
Mortgage loans held for sale	$0		0.00	$0	$0		0.00	$0	$0		0.00	$0
Federal funds sold	$2,293		5.20	$30	$1,456		4.85	$18	$1,722		2.22	$10
Deposits with banks	$13,213		5.34	$178	$15,618		4.95	$193	$14,641		2.35	$87
Investment securities - taxable	$255,822		4.03	$2,575	$247,515		3.66	$2,267	$227,715		2.41	$1,370
Investment securities - tax-exempt	$38,077		3.38	$216	$38,243		3.39	$217	$65,706		3.31	$402
Total Earning Assets	$943,585		5.40	$12,713	$932,732		5.12	$11,802	$898,926		3.89	$8,666
Non interest earning assets
Allowance for loan losses		(5,989)				(5,959)				(5,592)
Cash and due from banks	$5,814				$6,092				$7,018
Premises and equipment	$134				$164				$236
Accrued interest receivable	$3,443				$3,213				$2,526
Other real estate	$0				$0				$0
Other assets	$29,298				$28,375				$26,238
Unrealized gain (loss) on inv. securities		(26,530)				(25,610)				(20,599)
Total Assets	$949,755				$939,007				$908,753
Interest bearing liabilities
Interest bearing demand	$354,018		3.43	$3,062	$341,780		3.14	$2,673	$358,489		0.20	$18
Savings and money market	$132,842		2.67	$895	$139,463		2.62	$912	$133,119		4.36	$1,463
Time deposits - retail	$17,334		2.67	$117	$16,758		2.40	$100	$24,663		1.14	$71
Time deposits - wholesale	$147,046		4.33	$1,605	$128,795		3.90	$1,254	$107,704		1.34	$363
Total interest bearing deposits	$651,240		3.46	$5,679	$626,796		3.16	$4,938	$623,975		1.22	$1,915
Federal Home Loan Bank advances	$9,337		3.79	$91	$18,907		4.27	$204	$5,283		1.69	$23
Subordinated debt	$15,030		5.09	$195,399	$14,876		5.16	$193,899	$14,943		5.07	$194
Other borrowings	$60,606		4.40	$877	$58,342		5.86	$858	$1,213		2.70	$5
Total borrowed funds	$84,973		4.46	$968	$92,125		4.56	$1,062	$21,439		4.06	$222
Total interest bearing liabilities	$736,213		3.57	$6,647	$718,921		3.34	$6,000	$645,414		1.31	$2,137
Net interest rate spread			1.83	$6,067			1.78	$5,801			2.58	$6,529
Non-interest bearing deposits	$127,389				$139,807				$185,567
Other liabilities	$5,308				$3,743				$4,854
Shareholder's equity	$80,535				$76,536				$72,918
Total Liabilities and Shareholder's Equity	$949,445				$939,007				$908,753
Cost of funds			3.05				2.80				1.02
Net interest margin			2.61				2.54				2.95

*The information is preliminary, unaudited and based on company data available at the time of presentation. Totals may not foot due to rounding.

Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

Truxton Corporation
Yield Tables
For The Periods Indicated
(000's)
(Unaudited)
The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest earning assets and interest bearing liabilities and the average interest rate for interest earning assets and interest bearing liabilities, net interest spread and net interest margin for the periods indicated below:

	Nine Months Ended				Nine Months Ended
	September 30, 2023*				September 30, 2022*
	Average Balances		Rates/ Yields (%)	Interest Income/ Expense	Average Balances		Rates/ Yields (%)	Interest Income/ Expense

Earning Assets
Loans	$628,742		5.73	$26,967	$544,462		4.07	$16,565
Loan fees	$0		0.07	$342	$0		0.14	$551
Loans with fees	$628,742		5.81	$27,309	$544,462		4.20	$17,116
Mortgage loans held for sale	$0		0.00	$0	$38		4.12	$1
Federal funds sold	$1,544		5.08	$59	$1,904		0.95	$14
Deposits with banks	$13,532		4.91	$497	$25,553		0.87	$165
Investment securities - taxable	$247,046		3.67	$6,796	$234,000		2.07	$3,627
Investment securities - tax-exempt	$38,890		3.41	$666	$65,961		3.26	$1,195
Total Earning Assets	$929,754		5.12	$35,327	$871,918		3.45	$22,118
Non interest earning assets
Allowance for loan losses		(6,075)				(5,161)
Cash and due from banks	$6,148				$8,099
Premises and equipment	$167				$260
Accrued interest receivable	$3,169				$2,291
Other real estate	$0				$0
Other assets	$28,760				$23,710
Unrealized gain (loss) on inv. securities		(26,074)				(12,538)
Total Assets	$935,849				$888,579
Interest bearing liabilities
Interest bearing demand	$353,974		3.12	$8,263	$362,327		0.03	$90
Savings and Money Market	$133,262		2.35	$2,341	$144,003		2.40	$2,580
Time deposits - Retail	$17,446		2.33	$304	$17,317		0.92	$119
Time Deposits - Wholesale	$136,564		3.84	$3,926	$76,873		0.90	$518
Total interest bearing deposits	$641,247		3.09	$14,833	$600,520		0.74	$3,307
Federal home Loan Bank advances	$15,002		4.1	$467	$5,350		1.69	$69
Subordinated debt	$14,969		5.14	$583	$14,861		5.16	$582
Other borrowings	$43,646		4.44	$2,052	$1,112		2.31	$10
Total borrowed funds	$73,617		4.51	$2,519	$21,323		4.09	$661
Total interest bearing liabilities	$714,864		3.24	$17,353	$621,843		0.85	$3,968
Net interest rate spread			1.89	$17,975			2.60	$18,150
Non-interest bearing deposits	$139,068				$186,398
Other liabilities	$4,251				$4,002
Shareholder's equity	$77,561				$76,336
Total Liabilities and Shareholder's Equity	$935,744				$888,579
Cost of funds			2.71				0.65
Net interest margin			2.63				2.85

*The information is preliminary, unaudited and based on company data available at the time of presentation.

Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.